2011 was a year that everyone is happy to have survived. Some advertisers and networks crashed while others thrived. It was a year in which financial stability, ability to pay on time and the smarts to avoid legal issues became mission critical competitive advantages for many networks. All of these factors affected the new BLUE BOOK Top 20 rankings for performance marketing networks. And the changes in our approach mean that the rankings – to be announced at Affiliate Summit on Sunday – are the biggest and most authoritative yet.

For the first time we split our survey respondents into affiliates/publishers and merchants/advertisers so we could identify how their experiences with networks are different. And then we went further, dividing each of those groups into those who focus on CPS campaigns and those who specialize in CPA/CPL.

This segmenting of our respondent base means that we are able to clearly see which networks are loved by affiliates while being disliked by merchants, and vice versa. We can see those networks that genuinely are generating a lot of conversions via both business models as compared to those that only claim to. Additionally, the alignment of questions with the interests of the respondents has encouraged feedback and comments in greater depth than before.

There are three big insights that spring out of this year’s results:
1. Cost-Per-Sale Affiliate Marketing Is A Mature Industry – which means that growth and innovation are hard to come by.
2. CPA/CPL Is A High Risk-High Reward Endeavor – with some getting rich while others go broke or get arrested.
3. Barriers To Entry For Affiliates Are Getting Higher – as competition for traffic intensifies and training is taken over by hucksters.

Let’s look at those points in more detail:

1. Cost-Per-Sale Affiliate Marketing Is A Mature Industry

The CPS side of the industry shows all the signs of a mature, stable business ecosystem.
Among the networks there are several large, dominant incumbents that have the funds to invest in new technology and the scale to deal with the largest of clients. Then there are the niche networks that specialize in particular verticals or in providing exceptional service levels or unique offers. Publisher-side we see a similar dynamic with many niches dominated by one or more large affiliates with smaller affiliates fighting for scraps. This is good for advertisers: network selection is easy, fraud is almost non-existent and scalability is built-in. The problem will be if innovation and growth stall.

2. CPA/CPL Is A High Risk-High Reward Endeavor

What is clear from the survey is that while some publishers have suffered with failing networks, many have found networks that take care of them, provide support and pay on time. What we can see is the emergence of three species of CPA network. There are what we might call the upscale networks that get high marks from brand advertisers and that are seeking to grow the industry through quality traffic and professional service.

Then, there are those networks that live on the edge, competing by accepting lower quality traffic and by offering affiliates
shorter payout periods that leave the network vulnerable to cashflow issues unless
they are well-funded. And then there networks who occupy the middle ground: often with their own proprietary tracking platforms, a founder with a programming or incentivization background, and a work ethic that can only be applauded. The evolution of CPA networks into different species is a sign that the CPA/CPL sector is still rapidly changing.
Fortunes will be made by many, and lost by others.
But for brands and agencies thinking of putting a toe in the water, what has become clear is that the risks of CPA/CPL are now known and manageable, and the opportunities are huge.

3. Barriers To Entry For Newbie Affiliates Getting Higher

It is no secret that affiliate marketing can be difficult for many new publishers. Networks have always had policies in place to manage the high levels of attention that newbies can need, especially given the low level of business that they typically produce. But more publishers are expressing resentment about harsh network policies than we have ever seen before. It has affected the rankings of several networks. What is apparent is that there is a real need for simple, honest and realistic training for affiliates if the industry is to grow. Survival of the fittest is a policy that works for a while, but it is not conducive to producing a professional, honest affiliate community in the long term.

Our concluding thoughts are all positive: in our survey community we see an active, committed core of affiliates, ambitious and innovative. And we see advertisers that are enjoying good relationships with many networks, with real ROI and simple scalability.
As we come out of 2011, a year in which many were forced to live dangerously, performance marketing is poised to take a step forward. Onward and upward.